Tax blunder puts Volusia workers in IRS tailspin

February 21, 2006|By Kevin P. Connolly, Sentinel Staff Writer

DeLAND -- The IRS thinks scores of county employees -- possibly Volusia's entire work force of roughly 3,600 people -- owe back taxes because of erroneous information the county sent last year, officials said Monday.

It marks the second high-profile blunder involving Volusia County and the Internal Revenue Service in about three years.

County officials are scrambling to alert employees and to straighten out the embarrassing mess, which just came to the attention of County Council members.

County Council member Jack Hayman said he was in "utter dismay" after he first heard about the problem during the weekend from interim County Manager Matt Greeson.

"It's unacceptable," said Hayman, who plans to bring up the problem during Thursday's County Council meeting.

The latest count as of Monday estimated about 50 employees received IRS letters during the past week or two, county spokesman Dave Byron said.

It's a problem that could potentially affect everyone who worked for the county during 2004, including part-timers and County Council members, he said.

"Obviously, we're going to try to nip this in the bud as quickly as possible," Byron said Monday.

How could this happen?

County officials are still trying to figure out what went wrong.

They've traced it to what was supposed to be a routine electronic transfer of information about employee wages in February 2005 to the Social Security Administration, which then forwards the county's information to the IRS, Byron said.

It was supposed to contain information about wages for all of 2004. But it mistakenly contained information about the first six weeks of 2005.

Someone at the county figured out there was a problem sometime that spring and sent the correct information to the Social Security Administration. When that new data arrived at the IRS, it was added to the previous batch of information, Byron said.

"They didn't delete the first transmission," he said. As a result, six weeks' worth of income was apparently added to the wages reported for 2004 for an unknown number of employees, he said.

Byron said that the W-2 forms were correct. He didn't have a range of amounts the IRS is claiming is overdue. However, one high-ranking county employee Byron would not identify got a letter from the IRS saying he owed $755.

He urged any employee who receives such a letter to "act on it, and act on it quickly."

Internal e-mails and letters went out Monday with instructions on how employees should react to IRS letters, which Byron said should be brought to county offices in DeLand, New Smyrna Beach or Daytona Beach.

Byron said he didn't know the name of the person or persons thought to have caused the mistake. He said some type of unspecified "disciplinary action" is planned.

IRS remains mum

Gloria Sutton, a spokeswoman for the IRS district that includes Volusia, said she wasn't aware of Volusia's problem and her agency doesn't discuss details about specific employers.

She said there are "established procedures" for correcting mistakes made by employers.

County Chairman Frank Bruno said he doesn't want the problem to happen again, and he thinks county staffers are working hard to help the employees.

"I'm just concerned about our employees right now, and I don't want them panicking or anything for a mistake that county government made," Bruno said.

Past troubles

The latest problem comes almost three years after the county got out of a $100,000-plus fine for being about three weeks late with about $1 million in payroll taxes.

The county's external auditor, James Moore & Co., was instrumental in getting relief for the county.

Officials with the firm are scheduled to meet today with Chief Financial Officer Charlene Weaver, who Byron said first learned about the problem Friday. The meeting is being held to try to figure out a way to correct the problem as a "group" instead of on a case-by-case basis, Byron said.